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Royal Food Import Corp. v Ningbo Youngor International Trade & Transportation Co.,Ltd. (2012)

From: 清华大学法学院《中国商事仲裁法律汇编》         Updated: 2013-11-08   

The Intermediate People’s Court of Ningbo, Zhejiang (8 November 2013)

2012 Zhe Yongzhong Quezi No.3

Intermediate People’s Court of Ningbo, Zhejiang Province, 8 November 2013


Claimant: Royal Food Import Corp.

Legal Representative: Collin Tuthill 

Attorney: Yuan Bing 

Attorney: Wen Li


Respondent: Ningbo Youngor International Trade & Transportation Co.Ltd

Legal Representative: Zhou Jule 

Attorney: Sun Xi 

Attorney: Xu Ruchun


On 26 July 2011, the US Association of Food Industry (“AFI”) rendered an award on the dispute over a sale contract between Royal Food Import Corp. (“Royal”) and Ningbo Youngor International Trade & Transportation Co. Ltd (“Youngor”). On 14 September 2012, Royal applied to the Court to recognize and enforce the award. After accepting the case on 14 September 2012, the Court duly constituted a collegial bench and heard the case. Now the case is closed.


Royal claimed that: on 4 August 2009, the Applicant concluded with the Respondent a purchase confirmation No. Master-ACT (“Purchase Confirmation”)and agreed that the Applicant would purchase from the Respondent 143,136 boxes of green beans for the FOB price of USD 9.95/box. The parties agreed that any dispute arising out of the Purchase Confirmation should be referred to arbitration by the AFI in New Jersey, USA. Thereafter, the parties actually performed the contract. Royal made the payment according to the contract and Youngor delivered the goods between October 2009 and March 2010. However, after examination, it was found that the quality of the goods failed to meet the standard and that the goods were not suitable for human consumption. Therefore, the Applicant filed a request for arbitration with the AFI. The Respondent subsequently filed a lawsuit against the Applicant with the US District Court of New Jersey and applied for an injunction to halt the AFI arbitration proceedings on the ground that there was no arbitration agreement between the parties. Later on, the Respondent agreed to withdraw its lawsuit against the Applicant and agreed to refer to arbitration the above dispute relating to the Purchase Confirmation. On 26 July 2011, the AFI arbitral tribunal rendered an award No. 2544 and ordered Respondent to pay USD 560,250.61 to the Applicant. The Applicant therefore requests the court to recognize and enforce the award pursuant to the relevant provisions of the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (“New York Convention”) and the Civil Procedure Law of the PRC , and to rule that the Respondent shall pay to the Applicant the amount of USD 560,250.61 under the award as well as the interest calculated from 27 July 2011 to the date of actual payment, at the annual rate of 7%.


The Respondent contended that: the Applicant has failed to provide the original contract containing the arbitration clause, which is inconsistent with Article IV of the New York Convention. The facts relied upon by the Applicant for the application of recognition and enforcement are fabricated and the Applicant forged the contract. In the contract, both DesionLi and the Respondent were named as suppliers, but the Respondent had never accepted any commission from DesionLi. The Respondent’s commissioned factories made several transactions with the Applicant, but these transactions did not involve the goods under the contract at issue. Immediately upon receiving the notice of arbitration, the Respondent made a declaration with the AFI that the contract was forged. However, both the AFI and the New Jersey District Court ignored this declaration and rendered an arbitral award based on the false contract submitted by the Applicant. The decision of the New Jersey District Court submitted by the Applicant is insufficient in the PRC to prove the relevant facts. The Respondent requests the court to refuse to recognize and enforce the AFI arbitral award, according to the law.


After examination, the court has ascertained that: on 12 May 2010, the Applicant filed a request for arbitration with the AFI. On 18 May 2010, the AFI notified the Respondent Youngor that the Applicant had lodged an arbitration based on the arbitration clause under the contract No. Master-ACT dated 4 August 2009, and requested the Respondent to indemnify the Applicant for USD 495,819.50 and to bear the arbitration costs, on the grounds that the 143,136 boxes of green beans delivered by the Respondent failed to comply with the contractual standards. The arbitration [hearing] was to be held on 13 July 2010.


Upon receipt of the notice of arbitration, the Respondent pointed out to the AFI it had never signed the above contract with the Applicant and the seal fixed on the contract was forged. The Respondent requested AFI to refuse to accept the case.


On 2 August 2010, Youngor filed a lawsuit with the District Court and requested that court to: confirm that the Respondent had not agreed to refer to AFI arbitration; confirm that the arbitration was invalid for lack of arbitration agreement; confirm that the Respondent had not breached the contract and did not have to compensate the Applicant; etc. In its complaint, Youngor stated that: in August 2009, the Applicant intended to procure food in China, and therefore contacted Respondent sales representative, DesionLi. The Applicant sent its Purchase Order for green beans to DesionLi, and DesionLi in turn requested Respondent to prepare 143,136 boxes of green bean according to the Purchase Order. The Respondent shipped the goods in time. Thereafter, the Applicant lodged the arbitration. The Respondent claimed that the arbitration clause was added to the contract only after the dispute had arisen, and claimed that it had notified the Applicant and the AFI that it had never signed the arbitration agreement with anyone.


On 3 and 4 May 2011, the New Jersey District Court held its hearing. The Respondent’s attorney confirmed that the Respondent agreed to withdraw the litigation and refer the dispute to the arbitral tribunal. The next day, the District Court made a decision which recorded that: at the hearing, the Respondent agreed to withdraw its action against the Applicant, as well as its motion to issue a preliminary injunction; The Respondent further agreed to refer to arbitration the dispute relating to the purchase agreement concluded between the parties. The Respondent [in the US court] consented to the withdrawal. Hence, on 5 May 2011, the District Court decided to withdraw the lawsuit (cannot be reheard) andto end the motion to issue a preliminary injunction and further decided the case was closed.


On 1 July 2011, the Respondent sent a letter to the AFI and claimed that: the contract, signed on 4 August 2009, relied upon by the Applicant for submission to arbitration was forged. As indicated in the contract, DesionLi had no relationship with the Respondent nor had been empowered by the Respondent; The Applicant has no legal basis to claim that the goods did not comply with the contractual standards5 because the Applicant and the Respondent had never signed any contract relating to the quality of the goods. The Applicant should resolve its problems with DesionLi or with Hangzhou Yulong Food Co. Ltd; The Respondent requested the arbitration unilaterally submitted by the Applicant to be cancelled, and stated it would not participate to the arbitration proceedings conducted by the association.


On 26 July 2011, the AFI tribunal rendered Award No. [...] 2544, ordering the Respondent to pay USD 560,250.61 to the Applicant.


The above facts are proven by the Purchase Confirmation, the award rendered by the AFI, the request for arbitration, the notice of arbitration, the ruling and the hearing transcript of the District Court, the summons and the complaint, as submitted by the Applicant, and the correspondence sent by the Respondent to the AFI, as well as the relevant statements made by the parties and other evidences as submitted by the Respondent.


The Court holds that: the award was rendered by an AFI tribunal. As both the PRC and the USA are contracting states of the New York Convention, [the issue] whether this arbitral award shall be recognized is to be examined under to the relevant provisions of the Convention. 


The issue in this case is whether there is a valid arbitration agreement between the Applicant, Royal, and the Respondent, Youngor. The evidence submitted by the Applicant in this case, including the Purchase Confirmation containing the arbitration clause, which was signed and sealed by both parties, the complaint submitted before the US court by the Respondent, the decision of this US court (including the transcript of the hearing) etc., can prove that the parties have concluded an arbitration agreement. Since the Respondent has failed to provide sufficient evidence to prove its defense, the court will not accept [the defense]. In this case, none of the circumstances provided for in Article V of the New York Convention exist either. Therefore, there is no ground to refuse to recognize the arbitral award rendered by the AFI tribunal. Pursuant to Articles 153(1)(11) and 283 of the Civil Procedure Law of the PRC , it is ruled as follows:


Recognize arbitral award No. [...] 2544 made by the AFI on 26 July 2011.


The application fee of RMB 400 shall be borne by the Respondent, Ningbo Youngor International Trade & Transportation Co.Ltd.


The Ruling is Final.



Presiding Judge: Hu Shuwei

Judge: Hu Haiwei

Judge: Sun Bing

8 November 2013

Associate Court Clerk Chen Chong


Related Links:
皇家食品进口公司与宁波雅戈尔国际贸易运输有限公司买卖合同纠纷申请民事裁定书    



 

*The original text is Chinese and has been translated into English for reference only. If there is any inconsistency or ambiguity between the Chinese version and the English version, the Chinese version shall prevail.